Northern Rock may have to cut up to 2,000 jobs – one in three of its workforce – because of a dramatic slump in new business. Daily Telegraph. The Sunday Times. The Obsever

The bank has drawn up a business plan that will cause anxiety in the north-east, home to the most of its employees.

Northern Rock has said it has no plans for compulsory redundancies. It has put a freeze on hiring and is trying to agree voluntary departures.

But sources close to the situation believe it is almost inevitable Northern Rock will have to make redundancies. The Chancellor, Alistair Darling, indicated there is a limit to the Bank of England’s funding, which has hit £20bn.

The Sunday Times reported that powerful American financial services group GMAC, half-owned by the car giant General Motors, is to spearhead a rescue bid Northern Rock.

GMAC is to play a pivotal role in the bid being put together by Cerberus, the secretive New York private-equity house.

Cerberus, which owns a controlling 51% stake in GMAC, is one of three bidders now doing due diligence on Northern Rock’s books, alongside Virgin and JC Flowers.

Meanwhile, JC Flowers, the US private equity group in talks to buy Northern Rock, is seeking a comprehensive state guarantee for the bank before agreeing to any deal.

JC Flowers is also considering keeping a share listing to allow shareholders to benefit from any recovery in the bank's fortunes.